CHARU PARAG SHAH, MUMBAI V. ACIT CIR 14(3), MUMBAI

ITA 6687/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78904 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 05-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: B V JHAVERI
• Keywords: Business income; Salary income; Source of fund
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 6687/MUM/2011 ASSESSMENT YEAR: 2008-09 MRS. CHARU PARAG SHAH A-303, RAMJI HOUSE, 3 RD FLOOR, 30, JAMBULWADI, KALBADEVI ROAD, MUMBAI-400 002 VS. ACIT CIR -14(3) EARNEST HOUSE MUMBAI- 400 021 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. : ABGPS 5775 F ASSESSEE BY : SHRI B.V. JHAVERI REVENUE BY : SHRI M.L. PERUMAL DATE OF HEARING : 01.04.2014 DATE OF PRONOUNCEMENT : 06.06.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE LD.CIT(A)-25, MUMBAI DATED 03.08.2011 FOR THE ASSES SMENT YEAR 2008-09. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE DE CISION OF THE LD.CIT(A) CONFIRMING THE TREATMENT GIVEN BY AO TO THE SHORT T ERM CAPITAL GAIN EARNED/CLAIMED BY THE ASSESSEE AS INCOME FROM BUSINESS. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE, DURING THE YEAR UNDER CONSIDERATION, IN HER RETURN OF INCOME HAD DECLARED A TOTAL INCOME OF RS.13,76,651/-. IN THE COMPUTATION OF TOTAL INCOME, THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN OF RS.1,06,805/- WHICH WAS CLAIMED AS EXEMPT U/S 10(38 ) OF THE ACT. THE ASSESSEE HAD ALSO SHOWN SHORT TERM CAPITAL GAIN ON SALE OF SHARE S OF RS.11,21,171/-. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT, WHE REIN HE TREATED RS.11,21,171/- AS INCOME FROM SHARE TRADING INSTEAD OF SHORT TERM CAPITAL GAIN. ON APPEAL, THE LD.CIT(A) UPHELD THE DECISION OF THE AO TREATING TH E IMPUGNED RECEIPT AS BUSINESS INCOME. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESS EE IS IN APPEAL BEFORE US. ITA NO. 6687/MUM/2011 MRS. CHARU PARAG SHAH ASSESSMENT YEAR: 2008-09 2 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, FROM THE CHART FILED BY THE LD.AR DURING THE COURSE OF THE P ROCEEDINGS, IT IS NOTED THAT THE DEPARTMENT HAS ACCEPTED THAT THE ASSESSEE IS AN INV ESTOR IN SHARES FOR THE LAST 10 YEARS AND FROM THE AY 2001-02 TO 2012-13, EXCEPT DU RING THE YEAR UNDER CONSIDERATION, THE SHORT TERM CAPITAL GAIN OFFERED BY THE ASSESSEE HAS NOT BEEN DISTURBED BY THE REVENUE. IT IS FURTHER OBSERVED TH AT THE ASSESSEE HAS SHUFFLED HER INVESTMENT PORTFOLIO FROM TIME TO TIME AND EARNED S HORT TERM CAPITAL GAINS AND LONG TERM CAPITAL GAINS AND THE SAME HAVE BEEN OFFERED A ND TAXED ACCORDINGLY IN HER RETURNS OF INCOME EVERY YEARS. IT IS FURTHER OBSERV ED THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES OUT OF HER OWN CAPITAL AND THE ASSESSEE HAS NOT BORROWED ANY FUNDS EITHER FOR MAKING INVESTMENT IN SHARES OR OTH ERWISE. THE ASSESSEE HAS ALWAYS SHOWN INVESTMENT IN SHARES AS INVESTMENT IN HER A CCOUNTS AND ACCORDINGLY VALUED THE SHARE INVESTMENT AT COST ONLY. IT IS RELEVANT T O STATE THAT THE ASSESSEE HAS ALWAYS ENTERED INTO DELIVERY BASED TRANSACTIONS AND THEREFORE, THERE IS NO INTRA-DAY TRANSACTION EITHER IN THE YEAR UNDER CONSIDERATION OR IN THE SUBSEQUENT YEARS. MOREOVER, THE PERUSAL OF THE DETAILS OF SHORT TERM CAPITAL GAINS INDICATES THAT EXCEPT A COUPLE OF TRANSACTIONS, THE ASSESSEE HAS HELD THE SHARES FOR MORE THAN A MONTH. THIS SUGGESTS THAT THE ASSESSEE HAS MADE INVESTMENT IN SHARES FOR CAPITAL APPRECIATION. IT IS FURTHER RELEVANT TO POINT OUT T HAT THE ASSESSEE AFTER SELLING THE PARTICULAR SCRIP HAS NOT ENTERED INTO SAME SCRIP IN THE YEAR UNDER CONSIDERATION AND THEREFORE, THE ASSESSEE HAS NOT ACTED AS TRADER IN SHARES. IT IS ALSO RELEVANT TO NOTE THAT OUT OF 49 SCRIPS THERE ARE ONLY 17 SCRIPS WHIC H THE ASSESSEE HAD PURCHASED PRIOR TO 1 ST APRIL, 2007 I.E. IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2007-08, AND SHOWN THE SAID INVESTMENT IN SHARES AS INVESTME NT WHICH HAS BEEN VALUED AT COST. IT IS, THEREFORE, THE PROFIT ARISING FROM SAL E OF SUCH SCRIPS CANNOT BE TREATED AS BUSINESS INCOME AS THE AO HAS ACCEPTED THOSE SCRIPS AS INVESTMENT OF THE ASSESSEE. ELEVENTHLY, THE ASSESSEE IS A PARTNER IN THE FIRM O F M/S. V. NATVARLAL CARRYING ON BUSINESS OF DEALING IN ELECTRICAL GOODS FROM WHICH THE ASSESSEE HAS EARNED SHARE OF PROFIT WHICH IS SHOWN IN HER RETURNS OF INCOME REGU LARLY. FURTHER, WE FIND MERITS IN THE CONTENTION OF THE LD.AR THAT THE ASSESSEE HAS B EEN EMPLOYED AND THEREFORE THE ASSESSEE HAS EARNED SALARY INCOME. THESE SOURCES OF INCOME ARE INVESTED BY THE ASSESSEE REGULARLY AND EVERY YEAR IN EQUITY SHARES OF VARIOUS COMPANIES WHICH IS ITA NO. 6687/MUM/2011 MRS. CHARU PARAG SHAH ASSESSMENT YEAR: 2008-09 3 APPARENT FROM THE INVESTMENT IN SHARES SHOWN BY THE ASSESSEE EVERY YEAR. CONSIDERING THE ENTIRETY OF FACTS, WE ARE OF THE CO NSIDERED VIEW THAT THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREATING THE IMPUGNED RE CEIPT OF RS.11,21,171/- AS BUSINESS INCOME AGAINST THE SAME CLAIMED BY THE ASS ESSEE AS SHORT TERM CAPITAL GAIN. IN VIEW OF THAT MATTER, THE AO IS DIRECTED TO TREAT THE INCOME OF RS.11,21,171/- AS THE SHORT TERM CAPITAL GAINS AS CLAIMED BY THE A SSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF JUNE, 2014. //SD// / /SD// (R.C. SHARMA) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 06.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.